Instant Exchange VS a CEX: Who Wins?

[Pmalek]

I have always wondered if it makes sense to use an instant cryptocurrency exchange such as ChangeNow or Changelly compared to a popular CEX, for example. Of course, I am not talking about the trustworthiness, security, or safety of funds, but rather about the amounts of crypto you will get if you trade on such a platform.

I decided to perform a test to see how much you can get on an instant exchange compared to a CEX for different values: a small, medium, and high amount.

This is, of course not accurate, because I didn’t perform any real trades but just checked the values that the tested sites displayed. But nevertheless, it did show me which of these two is better.

I tested Binance versus ChangeNow.

Binance because it’s one of the most widely used CEXs and ChangeNow because it’s one of two instant swap platforms that I could think of from the top of my head. It's important to remember that ChangeNow is not a DEX or a non-custodial platform even though they claim to be "free of custody"(Source). 

The results

Scenario #1

For the first test, I wanted to purchase a small amount of bitcoin by exchanging a stablecoin for it. So, I decided to check how much BTC I could get for 50 USDT.

Binance

50 USDT would get me 0.00086 BTC on Binance.



According to preev.com, that was around $49.78 at the moment I did the check.



ChangeNow

The fixed rates on ChangeNow showed 0.00084595 BTC if swapped with 50 USDT.


According to preev.com, that was around $48.99 at the moment I did the check.



Which exchange is better for scenario #1?

At first glance, you would think Binance is the better option. And yes, you will get a little bit more BTC on Binance. However, don’t forget that Binance is an exchange. So once your trade is complete, you should withdraw your coins to your own wallet.

The Binance withdrawal fees are 0.0005 BTC (almost $29). If we subtract that from 0.00086, we are left with only 0.00036 BTC (around $21). In contrast to Binance, ChangeNow allows you to enter your own wallet address during the swap process. Once it’s complete, the coins will be sent to that address. All fees are included in the rate shown on the site, so there are no additional withdrawal fees.

Personally, I find ChangeNOW a better option than Binance for such small amounts.   


Scenario #2

My goal was to see how much bitcoin I could get for 1 ether for the second test. Here are the results.

Binance

For 1 ETH on Binance, I could get 0.070055 BTC.



That amount is worth around $4.036.



ChangeNow

For 1 ETH on ChangeNOW, the site offered me 0.06870159 BTC.



When I converted that to USD, it came out to $3.960.



Which exchange is better for scenario #2?

With Binance, you get a much bigger share of bitcoin. 0.070055 BTC ($4.036) compared to only 0.06870159 BTC ($3.960) on ChangeNow. Looking at it in terms of USD, the difference is $76.

Once we subtract Binance’s withdrawal fee of 0.0005 BTC, we are left with 0.069555 BTC. That is still more than what you would get on ChangeNow. Therefore, the winner in this category is Binance.   


Scenario #3

I wanted to see the difference between the two exchanges for a significantly higher amount for the third and final test. This time, I would be buying bitcoin for 50 ether. Here are the results:

Binance

Binance could have given me 3.51135 BTC for 50 ETH.



When we convert that amount into USD, that’s approximately $204.300.



ChangeNow

I could have gotten 3.4095245 BTC for 50 ETH if I had performed the swap on ChangeNow.



In terms of USD value, that’s around $198.400.



Which exchange is better for scenario #2?

It’s pretty clear who is the winner in this category. On Binance, the offer was 3.51135 BTC, while ChangeNow had an estimate of only 3.4095245 BTC. Even after we consider the Binance withdrawal fee of 0.0005 BTC, we are left with 3.51085 BTC compared to 3.4095245 BTC on ChangeNow.


Observations

• Most of the time, it's not worth using instant exchanges.
• Instant swap platforms have a significant advantage over traditional exchanges only for small trades (probably $100 worth of crypto and less).
• The bigger the trade is, the less favorable are the rates on an instant exchange.
• Instant exchanges could also offer certain benefits when swapping two assets that don’t have a trading pair on a regular exchange. For example, if you have Cardano and you want to purchase Stellar with it. Such a trading pair probably doesn’t exist on CEXs/DEXs, but it does on instant exchanges. To get Stellar on a CEX, you would probably have to convert Cardano to a stablecoin or to ETH or BTC. After that, a second trade needs to be carried out to swap the new asset to Stellar.
• When doing the tests, I didn't take into account maker and taker trading fees, assuming that Binance already includes those in the final estimates. Even if they don’t, those fees are relatively insignificant and amount to 0.1% max.

Please Note:

• This is not a sponsored article.
• This is not an advertisement of any exchange or trading platform.
• My recommendations are to stay away from instant exchanges because they have proven themselves to be untrustworthy numerous times in the past
• Do your own research and don’t take my word for it.

[mk4]

Nice experiment. Though the result was totally expected, it's great to see actual numbers.

I'd probably pick a more accurate title though. Technically both sides are CEXs, it's just that Binance is just a typical orderbook exchange while ChangeNow aggregates through multiple exchanges and adds a fee for the convenience.

[Pmalek]

Nice experiment. Though the result was totally expected, it's great to see actual numbers.

I honestly didn't expect that the difference would be that big. I knew going in that instant swap platforms aren't worth it, but I thought it would be a closer call.

I'd probably pick a more accurate title though. Technically both sides are CEXs, it's just that Binance is just a typical orderbook exchange while ChangeNow aggregates through multiple exchanges and adds a fee for the convenience.

I couldn't think of a better one, lol. Any ideas?
They are both CEXs, you are right, but I did find it interesting that ChangeNow claims that they are "free of custody" on their homepage. Non-custodial? I seriously doubt that. It could just be a false claim that they are making. I don't think that their clients are shown the private key of the address they are depositing their coins into. I wonder what they are basing that claim on...

[mk4]

I couldn't think of a better one, lol. Any ideas?
They are both CEXs, you are right, but I did find it interesting that ChangeNow claims that they are "free of custody" on their homepage. Non-custodial? I seriously doubt that. It could just be a false claim that they are making. I don't think that their clients are shown the private key of the address they are depositing their coins into. I wonder what they are basing that claim on...

The title is actually fine if you want to grab the attention of the typical non-expert peeps. Having a title such as "instant swap exchanges vs spot orderbook exchanges" would be technically more accurate, but most people would be like "ehh screw that topic I don't even know what that is". So probably leave it be LOL and just add a note on the main post about both exchange categories being technically "CEXs" to prevent confusion and to prevent people from thinking that instant exchanges are "DEXs".

[dansus021]

i actually using instant exchange on cex the binance have one with 10 second confirmation im not check the actual spread but i think binance using taker and add some fee and i only using 100 or below so compared to regular cex is still pretty same

[UserU]

Instant exchanges are good if your amounts are small, which I find them to be pretty convenient. Don't mind giving them some dollars as long as they get the job done since CEX tends to impose some min threshold.

Last week got my payment in BTC on a custodial wallet when the price was near its peak. Was like several thousand Sats short of 0.001 and I only had access to them once the price drops. Sucks.

LoyceV introduced FixedFloat to me which I found to be quite handy, until it ceased supporting BSC.

[bL4nkcode]

You forget to add an additional fee sending from user's wallet to instant exchange. Saying using instant exchange for smaller amounts is better but actually it's not as always, especially when it comes to ERC20 token and ETH related tokens listed.

It would cost a lot for them to send first before it got exchanged to other coins. Average ERC20 (ETH) tx fee as of writing is around $25 and you only have 100$ to be exchanged, either it will cost you $125 for the whole transfer or -$25 saying you only have $100 so it's now only $75, then Instant exchange rates are still lower than CEX. So at the end it's still better using CEX for ERC20 (ETH) exchange/transfer.

But for other coins other than ERC20 (ETH) I guess it might a little better on instant exchange, at least to those cheap tx fee.

[Pmalek]

So probably leave it be LOL and just add a note on the main post about both exchange categories being technically "CEXs" to prevent confusion and to prevent people from thinking that instant exchanges are "DEXs".

Thanks for the tip. I mentioned that ChangeNow is not a DEX or a non-custodial site.

You forget to add an additional fee sending from user's wallet to instant exchange.

But that transaction fee applies no matter whether you send coins from your own wallet to an exchange like Binance or to a swap platform like ChangeNow. So it's not needed. If I send money to you personally, or to a DEX, a casino, something else I am paying a mining fee.

[Findingnemo]

Instant exchanges aka swap exchanges are good for swapping small amount which I know it from my observation but you proved it with clear demonstration with different scenarios which includes swapping vs trading with small, moderate and high amount. But I haven't using any instant exchanges for a while due to their different KYC policies so I am just go with conventional spot trading for any amount and if its smaller amount then I just let it to be there on exchange's wallet itself.

[sheenshane]

If you blindly accept the high terrible fees on instant swap exchange, then that's good for you but if you want to save fees regular crypto exchange is the best for you.  Upon reading the OP thread the thing that comes up in my mind was Binance is a good exchange if we based on the fees but if in the fastest way and also the privacy coin instant swap exchange were reliable enough.

In an instant exchange, there's no leverage, margin, derivative stop loss because the fee is fixed and quite high.  Because the site has earned profit from the fixed fee and that's why in the experiment of OP was right, it's terrible high the fees to use in the instant swap, I have tried this using Coinomi Bitcoin wallet app, as I can advise always look first the fee per before making such transaction.

[Pmalek]

But I haven't using any instant exchanges for a while due to their different KYC policies so I am just go with conventional spot trading for any amount and if its smaller amount then I just let it to be there on exchange's wallet itself.

When we are on the subject of KYC verification, I think it depends on the amounts being exchanged. If we compare the two brands from this thread (ChangeNow and Binance), you will see the following: Binance requires all their existing and new customers to go through KYC verification. ChangeNow says they don't. However, their partners (I assume liquidity providers) will and can request KYC in certain cases. I have no idea how often that happens and if there is a threshold where that becomes a must. But all in all, the majority of CEXs will be required to perform KYC on their customers.

I have tried this using Coinomi Bitcoin wallet app, as I can advise always look first the fee per before making such transaction.

I think Coinomi has a partnership with Simplex, am I right?

[sheenshane]

I have tried this using Coinomi Bitcoin wallet app, as I can advise always look first the fee per before making such transaction.

I think Coinomi has a partnership with Simplex, am I right?

Yeah right, I think most of the trusted exchanges and custodial wallets have been used this Simplex, a licensed financial institution.
As long as you're running centralized services Simplex is very common to use.

Have you tried having experimented with this wallet app what is the result?  How much the fee will have cost if we compared to Binance since they have used 3 different swap exchanges like Changelly, Coinswitch, and Totle.

[pooya87]

The bigger the trade is, the less favorable are the rates on an instant exchange.

My experience was the exact opposite meaning the bigger the trade was, the better the given exchange rate.
I tried instant exchanges many months ago and with BTC/USDT pairs. Whenever I put a small amount of bitcoin to sell (like 0.005), they gave an exchange rate that was farther from the market price but if I entered a large amount (like 0.1) they gave a very favorable rate that was pretty close to the market price.
I believe the site I tried was called "sideshift".

[Charles-Tim]

My recommendations are to stay away from instant exchanges because they have proven themselves to be untrustworthy numerous times in the past

There is no research to do than this, in addition to increase fee for higher amount to be traded, the exchanging always takes 10 minutes or more, which can be as a result of the time required for miners to include transaction into a block like for bitcoin, and for other reasons for altcoins. So they are not what there name is if they are calling themselves instant exchange.

Also instant exchanges are designed to look like a decentralized means of exchanging, but they are not, until someone coin is seize and the instant exchange making it mandatory for the person to pass KYC, then will be the time such people will know how worse instant exchanges can be.

The transaction fee varies from 0.5% to 4% and depends on whether you choose a classic or fixed exchange rate.

From the percentage, it is also clear that instant exchange like ChangeNow will have fee higher than that of Binance. For low amount, the bitcoin withdrawal fee on Binance can make it expansive for the centralized exchange like Binance, but the withdrawal for altcoins are very cheap. But for higher amount, the exchange fee on instant exchange are very high to the extent it will be higher even than the withdrawal fee on custodial exchanges. Yes, that is true.

[Pmalek]

Have you tried having experimented with this wallet app what is the result?  How much the fee will have cost if we compared to Binance since they have used 3 different swap exchanges like Changelly, Coinswitch, and Totle.

With the ones available in Coinomi? No I honestly never thought about doing that so I have no experience to share on the matter.

<Snip>

I never used Sideshift but I was curious to see how it could perform against ChangeNow so I took a quick look at it.
 
When you exchange a small amount of BTC with ETH, Sideshift offers better rates than ChangeNow.
But when I tried swapping 1 ETH for BTC, ChangeNow was the one with better rates.
You can see what I was offered in the two screenshots below.
I guess the best thing to do if you really want to use an instant exchange is to take a look at BestChange to find the platform with the best rates for your trading pair at that time. Assuming they actually do that without adding a premium for the service. That might be something I could check out in the future. 

[stompix]

If you're going for small constant/ daily buys any instant exchange is a clear no, just look at this rates:





It went from
1 BTC ~ 55930.640464 USDTERC20
to
 1 BTC ~ 39296.5514 USDTERC20

Want to make it worse, try eth >usdt, the difference goes from 1 ETH ~ 4117.026732 USDTERC20 to 1 ETH ~ 2637.00225 USDTERC20

But since we're talking about buying crypto, then let's see what the rates are for fiat>btc
For 100$ you get Estimated rate: 1 BTC ~ 67403.61 USD.
For 50$ you get Estimated rate: 1 BTC ~ 76994.15 USD.

Even if I use the maximum amount allowed, 20k the rates are:
Estimated rate: 1 BTC ~ 62367.06 USD.
Of course, "No extra fees". lol.

[Pmalek]

<Snip>

Are we talking about rates of a few seconds/minutes apart or what happened here? How much time passed between those different offers when you took the screenshots? Try activating fixed rates by clicking on the padlock icon. Maybe that will fix things. But even with that enabled, those are extreme differences!

[stompix]

Are we talking about rates of a few seconds/minutes apart or what happened here?

No, I've changed the sum, simple as this, when you start going below 100$ the rates are just horrendous, ...of course "no fees" 
Here is an older post of mine with the same thing:
Why do exchanges give you so much less coin in return exchanging vs buying?

Btw, you have used USDT on Tron, try with USDT eth.. 

[Pmalek]

Btw, you have used USDT on Tron, try with USDT eth.. 

The Ethereum network requires ridiculously high fees, so that's just one small part of the problem. I am not going to try the Ethereum network for USDT because I see no reason to use that or the Omni Layer for USDT when you can get the same asset on Tron with significantly lower fees.

I just tried to recreate what you did on the BTC - USDT (TRC-20) pair, and here are the results:



The rates are different but the gaps aren't as big as you got them. Maybe if I tried it with the ERC-20 version of Tether I would get the same as you. But like I said, if I don't have to, I see no reason to use a network that is more expansive for the exact same thing.

[stompix]

But like I said, if I don't have to, I see no reason to use a network that is more expansive for the exact same thing.

But that's the point of testing, right? 
To find out what to do and what definitely not to do.
Anything related to ETH when it comes to low sums (I count <$200 as that) is clearly a no, that is why I trying to point out instant exchanges are good for a small amount but only in some cases.
If you want to exchange 1 BTC you get a good rate, 13.44, but if you dare to try and exchange 0.003 (around $200) you will get  12.09 for BTC>ETH, that's a 15% drop.

And it's not that poeple can always choose what to use, if you get from somebody ERC-20 you need to exchange them, right? If people would stop using the eth chain and switch to others the fees would drop but it's clear there is still usage.

Oh, and btw, I wouldn't dare to send 5BTC to any exchange, but especially an instant one.